In this photo illustration the Chinese technology firm Tencent logo seen on an Android mobile device with People’s Republic of China flag in the background.
GUANGZHOU, China — Chinese technology giants are looking to make changes to their business models and working practices in order to preempt moves by regulators as authorities crackdown on the once free-wheeling sector.
In the past year, regulators have introduced new rules in areas from anti-monopoly for internet companies to data security, targeting large tech firms.
With regulators breathing down tech companies’ necks, corporations have looked to make moves to appease authorities.
Tencent this month has looked to tighten up its patrol of minors playing games. According to Chinese regulations, minors are banned from playing online games between 10 p.m. and 8 a.m. Tencent, one of the biggest gaming companies in the world, said there are cases of kids using adult accounts to play games.
To counter that, the company will require the gamer to do a facial recognition scan on their phone to verify if they are an adult.
Over the past few years, China’s government has been concerned about video game addiction and how it could damage children’s health. In 2018, regulators froze video game approvals in China over concerns of violence in some titles as well as potential addiction and rising cases of myopia. Games in China need to be approved by censors in order to be released and monetized.
Tencent appears to be getting ahead of any further regulatory action with its latest moves.
Anti-monopoly focus
In February, regulators released anti-monopoly rules for internet platforms. Beijing is concerned about the size and power of China’s technology companies which have grown into some of the world’s largest, broadly unencumbered by regulation.
The focus of the Alibaba probe, which concluded in April and resulted in a $2.8 billion fine, was a practice that forces merchants to choose one of two platforms to sell their goods on.
Alibaba and Tencent have both effectively built up walls around their products. For example users can’t use Tencent’s WeChat Pay service on Alibaba’s Taobao e-commerce site.
But it appears both Tencent and Alibaba could be looking to get ahead of potential further antitrust action.
The Wall Street Journal reported on Wednesday that Alibaba and Tencent are looking to loosen up some of these blocks on each others’ products. This could include allowing WeChat Pay as an option on Alibaba’s shopping services.
“Such measures of self-regulation would be ahead of the regulation curve, as Tencent often is – and Alibaba hasn’t been,” Neil Campling, head of technology, media and telecoms research at Mirabaud Securities Limited, said in a note on Wednesday.
996 work culture
Technology companies are also trying to make changes to the long-standing practice of grueling work hours known as 996.
This refers to employees working from 9 a.m. to 9 p.m, six days a week. Alibaba founder Jack Ma once called the 996 culture a “huge blessing,” but it has faced intense criticism.
On Tuesday, Ling Zhenguo, a member of China’s top political advisory body known as the Chinese People’s Political Consultative Conference, wrote an op-ed in the entity’s official newspaper, apparently criticizing the 996 culture.
The internet economy should put “people at the center” shouldn’t link “every profit made with every hard working minute of employees,” according to a CNBC translation of the Mandarin article.
“We must be clearly aware that it’s in contrast to the market economy with Chinese characteristics to regard people’s legs as wheels and hands as robots,” Ling added, effectively saying that humans should be treated as humans.
Ling’s article highlights how 996 work culture could be targeted next by Beijing.
But technology companies have already begun to tweak their practices.
Last week, TikTok-owner ByteDance said that from Aug. 1, it was ending the practice of “big week, small week.” This is where workers would work every other Sunday and get paid. Short-video app Kuaishou also canceled this policy last month, according to local media.
Bluesky has surged in popularity since the presidential election earlier this month, suddenly becoming a competitor to Elon Musk’s X and Meta’s Threads. But CEO Jay Graber has some cautionary words for potential acquirers: Bluesky is “billionaire proof.”
In an interview on Thursday with CNBC’s “Money Movers,” Graber said Bluesky’s open design is intended to give users the option of leaving the service with all of their followers, which could thwart potential acquisition efforts.
“The billionaire proof is in the way everything is designed, and so if someone bought or if the Bluesky company went down, everything is open source,” Graber said. “What happened to Twitter couldn’t happen to us in the same ways, because you would always have the option to immediately move without having to start over.”
Graber was referring to the way millions of users left Twitter, now X, after Musk purchased the company in 2022. Bluesky now has over 21 million users, still dwarfed by X and Threads, which Facebook’s parent debuted in July 2023.
X and Meta didn’t immediately respond to requests for comment.
Threads has roughly 275 million monthly users, Meta CEO Mark Zuckerberg said in October. Although Musk said in May that X has 600 million monthly users, market intelligence firm Sensor Tower estimates 318 million monthly users as of October.
Bluesky was created in 2019 as an internal Twitter project during Jack Dorsey’s second stint as CEO, and became an independent public benefit corporation in 2022. In May of this year, Dorsey said he is no longer a member of Bluesky’s board.
“In 2019, Jack had a vision for something better for social media, and so that’s why he chose me to build this, and we’re really thankful for him for setting this up, and we’ve continued to carry this out,” said Graber, who previously founded Happening, a social network focused on events. “We’re building an open-source social network that anyone can take into their own hands and build on, and it’s something that is radically different from anything that’s been done in social media before. Nobody’s been this open, this transparent and put this much control in the users hands.”
Part of Bluesky’s business plan involves offering subscriptions that would let users access special features, Graber noted. She also said that Bluesky will add more services for third-party coders as part of the startup’s “developer ecosystem.”
Graber said Bluesky has ruled out the possibility of letting advertisers send algorithmically recommended ads to users.
“There’s a lot on the road map, and I’ll tell you what we’re not going to do for monetization,” Graber said. “We’re not going to build an algorithm that just shoves ads at you, locking users in. That’s not our model.”
Bluesky has previously experienced major growth spurts. In September, it added 2 million users following X’s suspension in Brazil over content moderation policy violations in the country and related legal matters.
In October, Bluesky announced that it raised $15 million in a funding round led by Blockchain Capital. The company has raised a total of $36 million, according to Pitchbook.
Alphabet shares slid 6% Thursday, following news that the Department of Justice is calling for Google to divest its Chrome browser to put an end to its search monopoly.
The proposed break-up would, according to the DOJ in its Wednesday filing, “permanently stop Google’s control of this critical search access point and allow rival search engines the ability to access the browser that for many users is a gateway to the internet.”
This development is the latest in a years-long, bipartisan antitrust case that found in an August ruling that the search giant held an illegal monopoly in both search and text advertising, violating Section 2 of the Sherman Act.
The potential break-up would include preventing Google from entering into exclusionary agreements with competitors like Apple and Samsung, part of a set of remedies that would last 10 years.
POLAND – 2024/11/13: In this photo illustration, the NVIDIA company logo is seen displayed on a smartphone screen. (Photo Illustration by Piotr Swat/SOPA Images/LightRocket via Getty Images)
Sopa Images | Lightrocket | Getty Images
Nvidia shares dropped in U.S. premarket trading Thursday after the tech giant’s third-quarter earnings failed to impress investors.
Shares of the chipmaker slumped 3.21% at around 5:03 a.m. ET, following the Wednesday release of Nvidia’s quarterly results, which beat on both the top and bottom lines.
Revenue came in at $35.08 billion, up 94% year-on-year and exceeding the $33.16 billion forecast by LSEG analysts. Earnings per share was 81 cents adjusted, also above analyst expectations.
Other chipmakers fell on the back of the market reaction to Nvidia’s third-quarter results. Shares of Intel, Qualcomm and Micron Technology all lost 1% or more in value, while AMD declined 0.6%.
The slump in Nvidia also had a knock-on effect on European semiconductor firms. ASML, a key chip equipment supplier, dropped 0.9%, while compatriot Dutch chip firm ASMI fell 0.5%. Chipmakers BE Semiconductor, STMicroelectronics and Infineon slipped 0.8%, 0.7 and 0.6%, respectively.
Several notable chip names were also in negative territory in Asia. TSMC, which makes Nvidia’s high-performance graphics processing units, eased as much as 1.5%. Contract electronics manufacturer Foxconn dropped 1.9%.
Why are Nvidia shares falling?
Nvidia has largely cornered the market for the high-powered chips powering the world’s most advanced artificial intelligence models, such as OpenAI’s ChatGPT.
Despite nearly doubling sales year-on-year, Nvidia’s third-quarter results showed a slowdown from previous quarters. Nvidia previously reported growth of 122% in the second quarter, 262% in the first quarter, and 265% in the fourth quarter of 2023.
Derren Nathan, head of equity research at Hargreaves Lansdown, said in emailed comments Wednesday that the dip in Nvidia’s share price “suggests even outstanding isn’t enough for some investors,” adding that he expects the stock to bounce back once markets open.
“NVIDIA’s generated stellar gains for shareholders over many years now, and right now it’s pretty hard to see any major holes in the investment case,” Nathan added.
Analysts are looking ahead to the much-anticipated launch of Nvidia’s next-generation chip called Blackwell. On the firm’s earnings call, CEO Jensen Huang said that demand for the chip is exceeding supply.
